Download as PDF
Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–05609 Filed 3–21–17; 8:45 am]
BILLING CODE 8011–01–P
to Section 19(b)(2) of the Act,5
designates May 9, 2017, as the date by
which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–IEX–2017–03).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Eduardo A. Aleman,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80257; File No. SR–IEX–
2017–03]
[FR Doc. 2017–05604 Filed 3–21–17; 8:45 am]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Designation of a Longer Period for
Commission Action on Proposed Rule
Change To Amend IEX Rule 16.135 To
Adopt Generic Listing Standards for
Managed Fund Shares
asabaliauskas on DSK3SPTVN1PROD with NOTICES
March 16, 2017.
On January 19, 2017, Investors
Exchange LLC (‘‘IEX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend IEX Rule 16.135 to adopt generic
listing standards for Managed Fund
Shares. The proposed rule change was
published for comment in the Federal
Register on February 8, 2017.3 The
Commission has received no comments
on the proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding, or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is March 25, 2017.
The Commission is extending this 45day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider this proposed rule change.
Accordingly, the Commission, pursuant
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 79940
(February 2, 2017), 82 FR 9858.
4 15 U.S.C. 78s(b)(2).
1 15
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80262; File No. SR–
NYSEMKT–2017–15]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change Modifying the NYSE Amex
Options Fee Schedule
March 16, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on March 9,
2017, NYSE MKT LLC (the ‘‘Exchange’’
or ‘‘NYSE MKT’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify the
NYSE Amex Options Fee Schedule
(‘‘Fee Schedule’’). The Exchange
proposes to implement the fee change
effective March 9, 2017. The proposed
change is available on the Exchange’s
Web site at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
5 Id.
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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14779
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to modify
the Fee Schedule to:
(i) Provide Order Flow Providers
(each an ‘‘OFP’’) that achieve certain
tiers of the Amex Customer
Enhancement (‘‘ACE’’) Program the
opportunity to receive an additional
credit for Customer Complex Orders;
and
(ii) establish a surcharge on any
Electronic non-Customer Complex
Order that executes against a Customer
Complex Order.
The ACE Program features five tiers,
expressed as a percentage of total
industry Customer equity and Exchange
Traded Fund option average daily
volume (‘‘TCADV’’) 4 and provides two
alternative methods for OFPs to receive
per contract credits for Electronic
Customer volume that the OFP, as agent,
submits to the Exchange.5 Currently, the
Exchange incents OFPs to achieve Tier
2 of the ACE Program by offering an
$0.18 per contract credit on Electronic
Customer volume or a slightly higher
credit of $0.19 per contract on Customer
Complex Orders.6
The Exchange proposes to offer OFPs
that achieve Tier 4 or 5 of the ACE
Program a credit of $0.25 per contract,
per leg for Electronic executions of
4 The volume thresholds are based on an OFP’s
Customer volume transacted Electronically as a
percentage of total industry TCADV as reported by
the Options Clearing Corporation (the ‘‘OCC’’). See
OCC Monthly Statistics Reports, available here,
http://www.theocc.com/webapps/monthly-volumereports.
5 See Fee Schedule, Section I. E. (Amex Customer
Engagement (‘‘ACE’’) Program—Standard Options),
available here, https://www.nyse.com/publicdocs/
nyse/markets/amex-options/NYSE_Amex_Options_
Fee_Schedule.pdf.
6 See id. at n.1. The Exchange proposes to correct
a typographical error by capitalizing the defined
term Electronic as it is used in note 1 to Section
I.E. See proposed Fee Schedule, Section I. E., n. 1.
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Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices
Customer Complex Orders, provided the
OFP executes more than 0.50% of
TCADV in initiating CUBE Orders in a
calendar month (the ‘‘Credit’’). The
Credit would be paid regardless of
whether the Complex Order trades
against interest in the Complex Order
Book or ‘‘legs out’’ and trades with
individual orders and quotes in the
Consolidated Book. An OFP that
achieves Tier 4 or 5 would remain
eligible to receive the applicable per
contract credit on Electronic Customer
volume, which range from $0.20–$0.24,
but would be eligible to receive the
slightly higher per contract credit of
$0.25 for its Complex Customer volume
provided the OFP meets the criteria for
the Credit. For example, an OFP that
achieved Tier 4 and also met the criteria
for the Credit would receive at least
$0.20 per contract for non-Complex
Electronic Customer volume and $0.25
per contract for Electronic Complex
Customer volume.
The Exchange also proposes to
establish a $0.05 surcharge on any
Electronic Non-Customer Complex
Order that executes against a Customer
Complex Order (the ‘‘Surcharge).7 The
Surcharge would apply to all such
Complex executions, including
Complex Orders executed in the
Exchange’s single-sided Complex Order
Auction (‘‘COA’’). The CUBE Auction is
not available for Complex Orders and
therefore the proposed Surcharge would
not apply to executions in a CUBE
Auction.8 The Exchange notes that the
proposed Surcharge is consistent with
charges imposed by other options
exchanges.9
asabaliauskas on DSK3SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
7 See proposed Fee Schedule, at Section I. A., n.6.
Per the Fee Schedule, a ‘‘Customer’’ is an
individual or organization that is not a BrokerDealer, per Rule 900.2NY(18); and is not a
Professional Customer; and a ‘‘Non-Customer’’ is
anyone who is not a Customer. See Fee Schedule,
‘‘Key Terms and Definitions,’’ supra note 5. Thus,
Non-Customer includes Specialists, e-Specialists,
Directed Order Market Makers, Firms, Broker
Dealers, and Professional Customers. The Exchange
notes that Firm Facilitation trades are not electronic
and are therefore not subject to the proposed
surcharge.
8 See Rule 971.1NY (Electronic Cross
Transactions) for a description of the CUBE
Auction, which is an electronic crossing
mechanism for single-leg orders with a price
improvement auction.
9 See Miami Securities International Exchange,
LLC (‘‘MIAX’’) fee schedule, available here, https://
www.miaxoptions.com/sites/default/files/pagefiles/MIAX_Options_Fee_Schedule_03012017B.pdf
(imposing a $0.10 on certain complex orders). See
also The Chicago Board Options Exchange, Inc.
(‘‘CBOE’’) fee schedule, available here, http://
www.cboe.com/publish/feeschedule/
CBOEFeeSchedule.pdf, at n. 35 (same).
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Section 6(b) of the Act,10 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,11 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Exchange believes that the
proposed Credit on Complex Orders is
reasonable, equitable, and not unfairly
discriminatory, as it provides OFPs with
an additional incentive to achieve the
highest two tiers of the ACE Program—
Tier 4 or 5. The Exchange believes that
incentivizing OFPs to route orders to the
Exchange would attract more volume
and liquidity to the Exchange, which
benefits all market participants by
providing more trading opportunities
and tighter spreads, even to those
market participants that do not
participate in the ACE Program.
The Exchange believes that the
proposed Surcharge is reasonable,
equitable, and not unfairly
discriminatory, as it applies to all NonCustomer orders. Applying the
Surcharge to all market participant
orders except Customer orders is
equitable and not unfairly
discriminatory because Customer order
flow enhances liquidity on the
Exchange for the benefit of all market
participants. Specifically, Customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts Market
Makers. An increase in the activity of
Specialists and Market Makers in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants.
In addition, the proposed surcharge is
reasonable, equitable, and not unfairly
discriminatory as it is consistent with
fees charged by other options
exchanges.12
Specifically, MIAX imposes a $0.10
‘‘Per Contract Surcharge for Removing
Liquidity Against A Resting Priority
Customer Complex Order on the
Strategy Book’’ for all option classes),
which may result in an overall per
contract fee of $0.60.13 Similarly, CBOE
10 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
12 See supra note 9.
13 See MIAX fee schedule, supra note 9
(providing for a potential total per contract fee of
$0.60 for Market Makers, which includes a
‘‘Complex Per Contract Fee for Penny Classes,’’ a
per contract ‘‘Marketing Fee,’’ and a $0.10 ‘‘Per
Contract Surcharge for Removing Liquidity Against
a Resting Priority Customer Complex Order on the
Strategy Book for Penny and Non-Penny Classes’’).
11 15
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Frm 00108
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imposes a $0.10 ‘‘Complex Surcharge’’
on certain ‘‘noncustomer complex order
executions that remove liquidity,’’ but
caps at $0.50 per contract ‘‘auction
responses in COA.’’ 14 The Exchange
notes that the proposed Surcharge of
$0.05 per contract is $0.05 less than—
or half the amount of—the surcharges
imposed on both MIAX and CBOE, and
is therefore competitive. In addition, the
Exchange believes that the proposed
surcharge is not new or novel as it
incorporates aspects of the (higher)
surcharges that are already imposed on
MIAX and CBOE.
Further, the proposed change to
capitalize the defined term Electronic,
would add clarity and internal
consistency to the Fee Schedule by
correcting a typographical error.
Finally, the Exchange believes the
proposed changes are consistent with
the Act because, to the extent the
modifications permit the Exchange to
continue to attract greater volume and
liquidity, the proposed changes would
improve the Exchange’s overall
competitiveness and strengthen its
market quality for all market
participants.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,15 the Exchange does not believe
that the proposed rule change would
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes the proposed
Credit is pro-competitive as it would
incent OFPs to direct Complex Order
flow to the Exchange, and thus provide
additional liquidity that enhances the
overall market quality and increases the
volume of contracts traded on the
Exchange. The proposed Surcharge
would not impose an unfair burden on
competition as it is consistent with fees
charged by other exchanges.16 To the
extent that the proposed changes make
NYSE Amex a more attractive
marketplace for market participants at
other exchanges, such market
The Exchange believes that MIAX does not subject
transactions in COA to any fee cap.
14 See CBOE fee schedule, supra note 8 (regarding
the Complex Surcharge, providing that ‘‘[a]uction
responses in COA and AIM for noncustomer
complex orders in Penny classes will be subject to
a cap of $0.50 per contract, which includes the
applicable transaction fee, Complex Surcharge and
Marketing Fee (if applicable)).’’
15 15 U.S.C. 78f(b)(8).
16 See supra notes 9, 13, 14.
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Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices
participants are welcome to become
NYSE Amex Options ATP Holders.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues. In such an
environment, the Exchange must
continually review, and consider
adjusting, its fees and credits to remain
competitive with other exchanges.
Because competitors are free to modify
their own fees and credits in response,
and because market participants may
readily adjust their order routing
practices, the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. For the reasons described
above, the Exchange believes that the
proposed rule change reflects this
competitive environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 17 of the Act and
subparagraph (f)(2) of Rule 19b–4 18
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 19 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
19 15 U.S.C. 78s(b)(2)(B).
Electronic Comments
• Use the Commission’s Internet
comment form (http://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEMKT–2017–15 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEMKT–2017–15. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEMKT–2017–15, and should be
submitted on or before April 12, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–05607 Filed 3–21–17; 8:45 am]
BILLING CODE 8011–01–P
18:14 Mar 21, 2017
20 17
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[Release No. 34–80260; File No. SR–NSCC–
2017–001]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing of a
Proposed Rule Change To Describe
the Illiquid Charge That May Be
Imposed on Members
March 16, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934, as
amended (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on March 13, 2017, National Securities
Clearing Corporation (‘‘NSCC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the clearing agency.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
amendments to NSCC’s Rules &
Procedures (‘‘Rules’’) 3 in order to
provide transparency in the Rules with
respect to an existing margin charge
described below (‘‘Illiquid Charge’’) and
to codify NSCC’s current practices with
respect to the assessment and collection
of the Illiquid Charge. The Illiquid
Charge is currently imposed on
Members’ Net Unsettled Positions in
certain securities that are not traded on
or subject to the rules of an exchange
and that exceed applicable volume
thresholds, when all conditions to the
application of the charge, described
below, are met. Such securities, to be
defined in the Rules as ‘‘Illiquid
Securities,’’ lack marketability, based on
insufficient access to a trading venue,
and may have low and volatile share
prices. Therefore, the Illiquid Charge is
designed to mitigate the risk that NSCC
may face when liquidating Illiquid
Securities following a Member default
and such liquidation is difficult or
delayed due to a lack of interest in a
particular Illiquid Security or
limitations on the share price of the
Illiquid Security.
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Capitalized terms used herein and not otherwise
defined herein are defined in the Rules, available
at www.dtcc.com/∼/media/Files/Downloads/legal/
rules/nscc_rules.pdf.
2 17
18 17
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Agencies

[Federal Register Volume 82, Number 54 (Wednesday, March 22, 2017)]
[Notices]
[Pages 14779-14781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05607]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80262; File No. SR-NYSEMKT-2017-15]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Change Modifying the NYSE Amex
Options Fee Schedule
March 16, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on March 9, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE
MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE Amex Options Fee Schedule
(``Fee Schedule''). The Exchange proposes to implement the fee change
effective March 9, 2017. The proposed change is available on the
Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to modify the Fee Schedule to:
(i) Provide Order Flow Providers (each an ``OFP'') that achieve
certain tiers of the Amex Customer Enhancement (``ACE'') Program the
opportunity to receive an additional credit for Customer Complex
Orders; and
(ii) establish a surcharge on any Electronic non-Customer Complex
Order that executes against a Customer Complex Order.
The ACE Program features five tiers, expressed as a percentage of
total industry Customer equity and Exchange Traded Fund option average
daily volume (``TCADV'') \4\ and provides two alternative methods for
OFPs to receive per contract credits for Electronic Customer volume
that the OFP, as agent, submits to the Exchange.\5\ Currently, the
Exchange incents OFPs to achieve Tier 2 of the ACE Program by offering
an $0.18 per contract credit on Electronic Customer volume or a
slightly higher credit of $0.19 per contract on Customer Complex
Orders.\6\
---------------------------------------------------------------------------
\4\ The volume thresholds are based on an OFP's Customer volume
transacted Electronically as a percentage of total industry TCADV as
reported by the Options Clearing Corporation (the ``OCC''). See OCC
Monthly Statistics Reports, available here, http://www.theocc.com/webapps/monthly-volume-reports.
\5\ See Fee Schedule, Section I. E. (Amex Customer Engagement
(``ACE'') Program--Standard Options), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
\6\ See id. at n.1. The Exchange proposes to correct a
typographical error by capitalizing the defined term Electronic as
it is used in note 1 to Section I.E. See proposed Fee Schedule,
Section I. E., n. 1.
---------------------------------------------------------------------------
The Exchange proposes to offer OFPs that achieve Tier 4 or 5 of the
ACE Program a credit of $0.25 per contract, per leg for Electronic
executions of
[[Page 14780]]
Customer Complex Orders, provided the OFP executes more than 0.50% of
TCADV in initiating CUBE Orders in a calendar month (the ``Credit'').
The Credit would be paid regardless of whether the Complex Order trades
against interest in the Complex Order Book or ``legs out'' and trades
with individual orders and quotes in the Consolidated Book. An OFP that
achieves Tier 4 or 5 would remain eligible to receive the applicable
per contract credit on Electronic Customer volume, which range from
$0.20-$0.24, but would be eligible to receive the slightly higher per
contract credit of $0.25 for its Complex Customer volume provided the
OFP meets the criteria for the Credit. For example, an OFP that
achieved Tier 4 and also met the criteria for the Credit would receive
at least $0.20 per contract for non-Complex Electronic Customer volume
and $0.25 per contract for Electronic Complex Customer volume.
The Exchange also proposes to establish a $0.05 surcharge on any
Electronic Non-Customer Complex Order that executes against a Customer
Complex Order (the ``Surcharge).\7\ The Surcharge would apply to all
such Complex executions, including Complex Orders executed in the
Exchange's single-sided Complex Order Auction (``COA''). The CUBE
Auction is not available for Complex Orders and therefore the proposed
Surcharge would not apply to executions in a CUBE Auction.\8\ The
Exchange notes that the proposed Surcharge is consistent with charges
imposed by other options exchanges.\9\
---------------------------------------------------------------------------
\7\ See proposed Fee Schedule, at Section I. A., n.6. Per the
Fee Schedule, a ``Customer'' is an individual or organization that
is not a Broker-Dealer, per Rule 900.2NY(18); and is not a
Professional Customer; and a ``Non-Customer'' is anyone who is not a
Customer. See Fee Schedule, ``Key Terms and Definitions,'' supra
note 5. Thus, Non-Customer includes Specialists, e-Specialists,
Directed Order Market Makers, Firms, Broker Dealers, and
Professional Customers. The Exchange notes that Firm Facilitation
trades are not electronic and are therefore not subject to the
proposed surcharge.
\8\ See Rule 971.1NY (Electronic Cross Transactions) for a
description of the CUBE Auction, which is an electronic crossing
mechanism for single-leg orders with a price improvement auction.
\9\ See Miami Securities International Exchange, LLC (``MIAX'')
fee schedule, available here, https://www.miaxoptions.com/sites/default/files/page-files/MIAX_Options_Fee_Schedule_03012017B.pdf
(imposing a $0.10 on certain complex orders). See also The Chicago
Board Options Exchange, Inc. (``CBOE'') fee schedule, available
here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf,
at n. 35 (same).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\11\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed Credit on Complex Orders is
reasonable, equitable, and not unfairly discriminatory, as it provides
OFPs with an additional incentive to achieve the highest two tiers of
the ACE Program--Tier 4 or 5. The Exchange believes that incentivizing
OFPs to route orders to the Exchange would attract more volume and
liquidity to the Exchange, which benefits all market participants by
providing more trading opportunities and tighter spreads, even to those
market participants that do not participate in the ACE Program.
The Exchange believes that the proposed Surcharge is reasonable,
equitable, and not unfairly discriminatory, as it applies to all Non-
Customer orders. Applying the Surcharge to all market participant
orders except Customer orders is equitable and not unfairly
discriminatory because Customer order flow enhances liquidity on the
Exchange for the benefit of all market participants. Specifically,
Customer liquidity benefits all market participants by providing more
trading opportunities, which attracts Market Makers. An increase in the
activity of Specialists and Market Makers in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants.
In addition, the proposed surcharge is reasonable, equitable, and
not unfairly discriminatory as it is consistent with fees charged by
other options exchanges.\12\
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\12\ See supra note 9.
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Specifically, MIAX imposes a $0.10 ``Per Contract Surcharge for
Removing Liquidity Against A Resting Priority Customer Complex Order on
the Strategy Book'' for all option classes), which may result in an
overall per contract fee of $0.60.\13\ Similarly, CBOE imposes a $0.10
``Complex Surcharge'' on certain ``noncustomer complex order executions
that remove liquidity,'' but caps at $0.50 per contract ``auction
responses in COA.'' \14\ The Exchange notes that the proposed Surcharge
of $0.05 per contract is $0.05 less than--or half the amount of--the
surcharges imposed on both MIAX and CBOE, and is therefore competitive.
In addition, the Exchange believes that the proposed surcharge is not
new or novel as it incorporates aspects of the (higher) surcharges that
are already imposed on MIAX and CBOE.
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\13\ See MIAX fee schedule, supra note 9 (providing for a
potential total per contract fee of $0.60 for Market Makers, which
includes a ``Complex Per Contract Fee for Penny Classes,'' a per
contract ``Marketing Fee,'' and a $0.10 ``Per Contract Surcharge for
Removing Liquidity Against a Resting Priority Customer Complex Order
on the Strategy Book for Penny and Non-Penny Classes''). The
Exchange believes that MIAX does not subject transactions in COA to
any fee cap.
\14\ See CBOE fee schedule, supra note 8 (regarding the Complex
Surcharge, providing that ``[a]uction responses in COA and AIM for
noncustomer complex orders in Penny classes will be subject to a cap
of $0.50 per contract, which includes the applicable transaction
fee, Complex Surcharge and Marketing Fee (if applicable)).''
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Further, the proposed change to capitalize the defined term
Electronic, would add clarity and internal consistency to the Fee
Schedule by correcting a typographical error.
Finally, the Exchange believes the proposed changes are consistent
with the Act because, to the extent the modifications permit the
Exchange to continue to attract greater volume and liquidity, the
proposed changes would improve the Exchange's overall competitiveness
and strengthen its market quality for all market participants.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\15\ the Exchange
does not believe that the proposed rule change would impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act. The Exchange believes the proposed Credit is
pro-competitive as it would incent OFPs to direct Complex Order flow to
the Exchange, and thus provide additional liquidity that enhances the
overall market quality and increases the volume of contracts traded on
the Exchange. The proposed Surcharge would not impose an unfair burden
on competition as it is consistent with fees charged by other
exchanges.\16\ To the extent that the proposed changes make NYSE Amex a
more attractive marketplace for market participants at other exchanges,
such market
[[Page 14781]]
participants are welcome to become NYSE Amex Options ATP Holders.
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\15\ 15 U.S.C. 78f(b)(8).
\16\ See supra notes 9, 13, 14.
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The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues. In
such an environment, the Exchange must continually review, and consider
adjusting, its fees and credits to remain competitive with other
exchanges. Because competitors are free to modify their own fees and
credits in response, and because market participants may readily adjust
their order routing practices, the degree to which fee changes in this
market may impose any burden on competition is extremely limited. For
the reasons described above, the Exchange believes that the proposed
rule change reflects this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \17\ of the Act and subparagraph (f)(2) of Rule
19b-4 \18\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEMKT-2017-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2017-15. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEMKT-2017-15, and should
be submitted on or before April 12, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05607 Filed 3-21-17; 8:45 am]
BILLING CODE 8011-01-P